- Fundraising struggled in 2024, marking the third consecutive year of declines, with $80 billion of aggregate capital raised, reminiscent of 2016 figures.
- However, core fundraising has reached new heights, with $9.5 billion raised in 2024. To be fair, the number of funds has also increased to record levels, shrinking the average size compared to historical trends.
- After peaking above $390 billion at the end of 2022, investors are spending down their reserves.
- At year-end, cash stockpiles were 40% below peak levels, with prominent strategies such as debt (-51%), core plus (-59%), and distressed (-70%) seeing more significant declines.
- Along with pent-up sell-side pressure from fund extensions, debt maturities, and denominator effects driving deals in 2025, shifts in uninvested capital will be key factors to watch.
Fundraising in today’s market is challenging. It’s not uncommon for pension funds, endowments, and institutions to want to see clear signs of a market bottom and the beginning of a new cycle before committing capital. As the commercial real estate market continues to rebalance, fundraising has fallen for three straight years. Per estimates from Preqin, around $80 billion was raised in 2024 targeting North American investment. This figure marks the lowest level since 2016 and far below the peak of $155 billion in 2021.
Meanwhile, the number of funds seeking capital increased compared to 2023, signaling heightened competition and a sign of market recovery. Core fundraising has been a bright spot, with $9.5 billion raised over the past year, an all-time high. This trend suggests that trophy office could see momentum in the quarters ahead, along with net-lease assets and other best-in-class properties.
Aaron Jodka
Stockpiles are being depleted as funds, facing acquisition opportunities and redemption pressures, spend down their reserves, which have fallen 40% from its 2022 peak.
Given this challenging backdrop, stockpiles are not being replenished. After more than a decade of annual gains, the mountains of cash that funds have been sitting on are being spent down. Uninvested capital is down 40% from 2022’s peak, with a 35% decrease in 2024 alone. A combination of acquisition opportunities, redemption queues, and equity infusions at refinancing have weighed on totals.
One of the strongest arguments for a rebound in sales volume has been the strong capital position of investors. While levels are down, they remain high relative to any year before 2018. Over the past year, the stock market’s strong performance has created a denominator effect for real estate, leaving investors under-allocated to the asset class. Debt maturities and distress will prompt additional market clearing, and funds, which have seen their lives extended, will create sell-side pressure.
While aggregate investable capital bears watching, 2025 remains poised to be a stronger year than the market has seen in recent memory.
